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Is First Trust NASDAQ Oil & Gas ETF (FTXN) a Strong ETF Right Now?
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Launched on 09/20/2016, the First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) is a smart beta exchange traded fund offering broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FTXN has been able to amass assets over $254.27 million, making it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, FTXN seeks to match the performance of the Nasdaq US Smart Oil & Gas Index.
The Nasdaq US Smart Oil & Gas Index is a modified factor weighted index, designed to provide exposure to US companies within the oil and gas industry.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.60% for FTXN, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.97%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector - about 100% of the portfolio.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 8.10% of the fund's total assets, followed by Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) .
Its top 10 holdings account for approximately 57.03% of FTXN's total assets under management.
Performance and Risk
The ETF has added about 10.30% and is up about 13.92% so far this year and in the past one year (as of 09/12/2023), respectively. FTXN has traded between $22.88 and $31.59 during this last 52-week period.
The fund has a beta of 1.45 and standard deviation of 36.65% for the trailing three-year period. With about 44 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Oil & Gas ETF is not a suitable option for investors seeking to outperform the Energy ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.61 billion in assets, Energy Select Sector SPDR ETF has $38.62 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust NASDAQ Oil & Gas ETF (FTXN) a Strong ETF Right Now?
Launched on 09/20/2016, the First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) is a smart beta exchange traded fund offering broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FTXN has been able to amass assets over $254.27 million, making it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, FTXN seeks to match the performance of the Nasdaq US Smart Oil & Gas Index.
The Nasdaq US Smart Oil & Gas Index is a modified factor weighted index, designed to provide exposure to US companies within the oil and gas industry.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.60% for FTXN, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.97%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector - about 100% of the portfolio.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 8.10% of the fund's total assets, followed by Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) .
Its top 10 holdings account for approximately 57.03% of FTXN's total assets under management.
Performance and Risk
The ETF has added about 10.30% and is up about 13.92% so far this year and in the past one year (as of 09/12/2023), respectively. FTXN has traded between $22.88 and $31.59 during this last 52-week period.
The fund has a beta of 1.45 and standard deviation of 36.65% for the trailing three-year period. With about 44 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Oil & Gas ETF is not a suitable option for investors seeking to outperform the Energy ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.61 billion in assets, Energy Select Sector SPDR ETF has $38.62 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.